03/24/2010 05:12 am ET | Updated May 25, 2011

Congress Should Fast Track the Housing Fairness Act

Four million instances of housing discrimination occur each year, yet federal, state, and local fair housing law enforcement agencies processed fewer than 11,000 complaints in 2008, according to the National Fair Housing Alliance (NFHA). If the objective of the 1968 federal Fair Housing Act was to replace the ghettos with "truly integrated and balanced living patterns", as Senator Walter Mondale, a prime sponsor of that bill, famously said right before its passage, then there is work to be done. Quick passage of the Housing Fairness Act of 2009 would be one important step in that direction.

The Housing Fairness Act of 2009 (HR 476) would require HUD to conduct a nationwide paired-testing program and take other investigative actions to identify areas and levels of discrimination in housing and mortgage lending markets, strengthen education and outreach efforts, promulgate and enforce new rules to assure that recipients of federal housing funds take steps to affirmatively further fair housing, and provide additional support for private fair housing organizations. The two most critical components of this bill are the $20 million it would provide for nationwide testing and the additional support it would provide for fair housing advocacy groups, described by Leslie M. Proll, Director of the Washington DC Office of the NAACP Legal Defense & Educational Fund, as "the mainstay of the fair housing movement."

Paired-testing is an investigative technique in which two testers or mystery shoppers (usually one white and one non-white) are assigned identical financial characteristics and housing preferences and then approach housing or housing service providers (e.g. mortgage lenders, home insurers) to inquire about the availability of the product or service that they offer. Since the shoppers are identical in virtually every way, except for the characteristic being tested (e.g. their race, gender, age) presumably they will be treated the same. Substantial differences in treatment would constitute evidence of discrimination.

Today most of the smoking guns have been put away. "No Irish Need Apply" signs are rare. But testing has uncovered substantial differences in the availability of housing (including whether or not any units were available or the number of units that were shown), the neighborhoods in which homes were shown (steering or directing people to neighborhoods where most of the people "look like them" has increased in recent years) the price of monthly rents, interest rates and fees for mortgage loans, premiums and terms and conditions of home insurance policies (e.g. full replacement cost versus market value policies), accuracy of home appraisals and other features of the home purchasing and renting procedures. As the Seventh Circuit Court of Appeals stated in Richardson v. Howard in 1983 "It is frequently difficult to develop proof in discrimination cases and the evidence provided by testers is frequently valuable, if not indispensable." And as the US District Court in Oregon observed in 1997 in Independent Living Resources v. Oregon Arena Corporation "Testing was the most effective method -- and perhaps the only effective method- of enforcing the FHA."

The last nationwide paired-testing audit, carried out by the Urban Institute for HUD in 1999, showed that black and Hispanic homeseekers, for both rental and home purchase units, encountered discrimination in approximately 20 percent of their initial visits with rental or sales agents. Fair housing groups continue to consistently find discrimination in their testing programs. Between 2004 and 2006, in two paired-testing investigations of financial service providers, the National Community Reinvestment Coalition uncovered disparate treatment in more than 40 percent of its audits. For example, in a Baltimore suburb a white tester was offered a 30 year fixed-rate loan with an interest rate of 5.75 percent compared to 8.85 percent for a slightly better qualified black tester. In Los Angeles a white tester was given information about five loan products. The black tester was told about one adjustable rate loan.

Private, not-for-profit fair housing advocacy groups have truly been the "mainstay" of fair housing activity. As Shanna Smith, President and CEO of NFHA, recently told the House Financial Services Committee, in 2008 30,758 fair housing complaints were filed. Fair housing organizations with an average of five staff people per group processed 20,173 of these complaints. HUD and the US Department of Justice processed 2,156 and state and local agencies processed 8,429. NFHA also reported that between 1990 and 2008 its members helped victims of discrimination recover $275 million. In nearly half of its lawsuits testing evidence proved critical.

Fair housing organizations often resort to adversarial tactics to protect their clients. But what begins as an adversarial relationship often turns into a productive partnership. For example, in the 1990s NFHA, again relying on testing, filed and settled administrative complaints against State Farm and Nationwide insurance companies. Today the three organizations are collaborating on a media campaign that promotes the benefits of integrated living. (See

There is no magic bullet than can resolve the complex dynamics of discrimination and segregation. HR 476 is no substitute for broader enforcement by HUD, Justice, and other fair housing law enforcement agencies. But one critical concrete step that Congress could take now to move us closer to the goal of truly integrated and balanced living patterns would be passage of the Housing Fairness Act of 2009.